Japanese Want More U.S. Real Estate, Poll Finds : Japan: Executives surveyed put California No. 1 on the list of places to purchase property in 1990.

In sharp contrast to the current pessimism among U.S. real estate executives, Japanese companies are bullish about the 1990 outlook for property investments, especially in the Southern California region, according to a new survey.

Japanese firms expect to increase their real estate investment in 1990 from 1989 in certain regions of the United States, but some plan to scale back in the Southwest, according to the survey of 200 executives of Japanese subsidiaries and branch offices in the United States.

The survey is the first indication of spending plans by Japanese companies. “I was surprised on how bullish the Japanese were,” said Christopher Mead, president of Mead Ventures Inc. His Phoenix firm, which publishes several newsletters and other information on international business, conducted the survey between Nov. 10 and Dec. 8 for Mead’s 1990 edition of “Japanese Investment in U.S. and Canadian Real Estate Directory.”

“I was among the many people who believed that the Japanese interest in the United States had peaked,” Mead said. “While there still will be a heavy level of investment here, I didn’t see that it was going to get any higher.

“There has been some opposition to Japanese investment emerging in places like Hawaii,” Mead said. “We also had heard the Japanese government was quietly urging Japanese investors not to buy high-profile U.S. properties. But not long after that, Mitsubishi bought a chunk of the Rockefeller Center.”

The survey was conducted after the announcement Oct. 31 that Mitsubishi Estate Co. had bought a 51% stake in the Rockefeller Group, which owns Rockefeller Center.

Findings of the survey showed 17.5% of the respondents indicated that their companies plan significant increases in real estate investment in 1990, while 46% projected some increases. The most attractive U.S. metropolitan area for Japanese real estate activities, according to the survey, is Los Angeles. That is followed by New York City, San Francisco, Honolulu and San Diego.

“The strength of California is overwhelming with three of the top five cities, even after the earthquake. It was impressive,” said Mead, who noted that the city rankings also revealed a wide portion of the country is being passed over by most Japanese companies.

The optimism of Japanese companies contrasts with the apprehensive view of 1990 among U.S. real estate executives, according to Mead, who publishes the monthly newsletter “Japanese Investment in U.S. Real Estate Review.” He attributed the difference to the Japanese having easy access to capital while may American companies are having difficulty raising cash.

In addition, Mead said that with the traditional Japanese business focus on the long term, many Japanese firms may not be as worried as Americans about the ups and downs in the U.S. real estate market. They also invest in markets where prices are rising or stable--not falling.

A few respondents to the survey expressed concern about American opposition to Japan real estate investment in the United States. However, not many said they considered local attitudes to Japanese investment when they selected cities or states for purchases.

The most attractive states for Japanese investment, according to the results of the survey, were California, New York, Hawaii, Illinois and Washington. Mead said the preferred areas of investment are concentrated on the Pacific and Atlantic coasts and Hawaii, with a few exceptions. Investment interest focuses within two triangles from Houston to Seattle to Los Angeles and Southern California, and from Chicago to Miami to Boston, the survey indicated.

The survey showed that several Japanese firms are cutting back on their activities in Texas, Arizona and Colorado, where there is comparatively little Japanese investment now. Reasons cited for the cutbacks included overbuilding and poor economic conditions.

Mead said a few Japanese firms seemed to be expecting subsidies for locating in a particular area. The prevailing philosophy, however, is to ensure profitability over the long run. “Chasing bargains in a weak market could be asking for trouble,” the survey said.